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An international analysis of CEO social capital and corporate risk‐taking

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  • Stephen P. Ferris
  • David Javakhadze
  • Tijana Rajkovic

Abstract

This study examines the effects of CEO social capital on corporate risk‐taking around the world. We document a significant positive relation between CEO social capital and aggregate corporate risk‐taking. Further, we find that CEOs with large social capital prefer riskier investment and financial policies. We also determine that the effect of CEO social capital on corporate risk‐taking is moderated by the extent of legal protections provided to shareholders, the financial development, and the culture of the country in which a firm is incorporated. Our results are robust to alternative proxies of risk‐taking, alternative model specifications, and tests for endogeneity.

Suggested Citation

  • Stephen P. Ferris & David Javakhadze & Tijana Rajkovic, 2019. "An international analysis of CEO social capital and corporate risk‐taking," European Financial Management, European Financial Management Association, vol. 25(1), pages 3-37, January.
    • Handle: RePEc:bla:eufman:v:25:y:2019:i:1:p:3-37
    DOI: 10.1111/eufm.12156
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